Colorado R&D Tax Credits

Colorado provides a research and development (R&D) credit for taxpayers located within an Enterprise Zone (EZ).  An application is required, therefore the taxpayer must pre-certify with their local Enterprise Zone Administrator to be eligible to claim the credit (See Form DR 0074).  Pre-certified taxpayers who intend to claim an EZ R&D credit must complete a certification application (See Forms DD 0076 or DD 0077) and receive approval from the appropriate EZ Administrator.

Businesses engaged in research and experimental expenditures may earn a 3% tax credit on the increase in such expenditures, as compared to that of the prior 2 years (the Base Amount).

Learn more about Colorado's Enterprise Zones Tax Credits here. 

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R&D Tax Credit Available:

Yes

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Eligible Entities:

C-Corporation, S-Corporations, LLCs, Partnerships

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Deadline for Tax Filing:

Due with Colorado Tax Return

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Data Required to Compute Credit:

Claim Period Colorado Qualified R&D Expenses (QREs)

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What Information is needed?

QREs for Prior 2 Years

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Credit Carryforward:

4 Years

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The Colorado state R&D tax credit equals:

• 3% of the amount claim period QREs exceeds the average QREs from the prior two years;
• In each tax year, the taxpayer may claim no more than 25% of the total credit (remainder to be carried forward) plus any applicable carryover amount from a prior year (up to 25% of the original credit); and
• The credit is only available to taxpayers located with certain Enterprise Zones.

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Specific Items to Note:

• Pre-certification must be applied for online or by submitting DR 0074, DR 0076 or DR 0077 certification forms to the EZ Administrator.
• Total amount of credit must be divided equally over four years. Entity may claim 25% of the credit expenditure was made and 25% in each of the following 3 years.
• To the extent that the credit for any year exceeds the tax liability for such year after other credits have been claimed, the excess may be carried forward and claimed until it is used.